Question 1

The relevant factors in computing depreciation do not include:

Accepted Answer

A) Cost. 
B) Salvage value. 
C) Useful life. 
D) Depreciation method. 
E) Market value. 
A) Cost. 
B) Salvage value. 
C) Useful life. 
D) Depreciation method. 
E) Market value.

Question 2

Depletion is:

Accepted Answer

A) The process of allocating the cost of natural resources to the period when it is consumed. 
B) Calculated using the double-declining balance method. 
C) Also called amortization. 
D) An increase in the value of a natural resource when incurred. 
E) The process of allocating the cost of intangibles to periods when they are used. 
A) The process of allocating the cost of natural resources to the period when it is consumed. 
B) Calculated using the double-declining balance method. 
C) Also called amortization. 
D) An increase in the value of a natural resource when incurred. 
E) The process of allocating the cost of intangibles to periods when they are used.

Question 3

On January 1, Year 1, Naples purchased a computer system that cost $1,480,000. The estimated useful life of the computer is 3 years and salvage value is $40,000. Straight-line depreciation is to be used. On January 1, Year 2, Naples determined that the estimated useful life of the computer would be 4 years instead of 3 years. The estimated salvage value will only be $10,000.
Prepare the journal entry to record depreciation expense for Year 1.
Prepare the journal entry to record depreciation expense for Year 2.

Accepted Answer

The answer of On January 1, Year 1, Naples purchased...

Question 4

When originally purchased, a vehicle costing $23,000 had an estimated useful life of 8 and an estimated salvage value of $1,500. After 4 years of straight-line depreciation, the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value. The depreciation expense in year 5: equals:

Accepted Answer

A) $5,375.00. 
B) $2,687.50. 
C) $5,543.75. 
D) $10,750.00. 
E) $2,856.25. 
A) $5,375.00. 
B) $2,687.50. 
C) $5,543.75. 
D) $10,750.00. 
E) $2,856.25.

Question 5

Which of the following is an example of a betterment?

Accepted Answer

A) Changing the oil in an automobile. 
B) Replacing a worn engine in a delivery van with a similar engine. 
C) Obtaining an insurance policy with higher coverage on a building. 
D) Adding an automatic sorter to a copy machine. 
E) Repairing damage to a warehouse incurred in a windstorm. 
A) Changing the oil in an automobile. 
B) Replacing a worn engine in a delivery van with a similar engine. 
C) Obtaining an insurance policy with higher coverage on a building. 
D) Adding an automatic sorter to a copy machine. 
E) Repairing damage to a warehouse incurred in a windstorm.

Question 6

Which of the following is an example of an extraordinary repair?

Accepted Answer

A) New tires for a truck. 
B) Replacement of all florescent light tubes in an office. 
C) Carpet cleaning and repair. 
D) Replacing the roof on a manufacturing warehouse. 
E) Routine machine maintenance. 
A) New tires for a truck. 
B) Replacement of all florescent light tubes in an office. 
C) Carpet cleaning and repair. 
D) Replacing the roof on a manufacturing warehouse. 
E) Routine machine maintenance.

Question 7

The cost of an intangible asset is systematically allocated to depreciation expense over its estimated useful life.

Accepted Answer

A) True 
 B)False

Question 8

Explain how to calculate total asset turnover. Describe what it reveals about a company's financial condition, whether a higher or lower ratio is desirable, and how it is best applied for comparative purposes.

Accepted Answer

Total asset turnover is calculated by di

Question 9

A company purchased and installed equipment on January 1 at a total cost of $72,000. Straight-line depreciation was calculated based on the assumption of a five-year life and no salvage value. The equipment was disposed of on July 1 of the fourth year. The company uses the calendar year.
1. Prepare the general journal entry to update depreciation to July 1 in the fourth year.
2. Prepare the general journal entry to record the disposal if the equipment was sold for $15,000 cash.

Accepted Answer

The answer of A company purchased and installed equipment on...

Question 10

A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a salvage value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. Using the units-of-production method, what is the amount of accumulated depreciation at the end of the first year?

Accepted Answer

A) $36,000. 
B) $38,000. 
C) $144,000. 
D) $152,000. 
E) $154,000. 
A) $36,000. 
B) $38,000. 
C) $144,000. 
D) $152,000. 
E) $154,000.

Question 11

Intangible assets do not include:

Accepted Answer

A) Patents. 
B) Copyrights. 
C) Trademarks. 
D) Goodwill. 
E) Land held as an investment. 
A) Patents. 
B) Copyrights. 
C) Trademarks. 
D) Goodwill. 
E) Land held as an investment.

Question 12

A company had average total assets of $887,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

Accepted Answer

A) 0.81. 
B) 0.89. 
C) 1.09. 
D) 1.13. 
E) 1.23. 
A) 0.81. 
B) 0.89. 
C) 1.09. 
D) 1.13. 
E) 1.23.

Question 13

_________________ refers to a plant asset that is no longer useful in producing goods or services with a competitive advantage because of new inventions and improvements.

Accepted Answer

The answer of _________________ refers to a plant asset that...

Question 14

Plant assets refer to intangible assets that are used in the operations of a business.

Accepted Answer

A) True 
 B)False

Question 15

A company paid $320,000 for equipment that was expected to last five years and to have a salvage value of $40,000. During the third year of the equipment's life, $39,000 cash was paid for replacement parts that were expected to increase productivity by 10% each year. Prepare the journal entry to record the $39,000 cost incurred in the third year.

Accepted Answer

The answer of A company paid $320,000 for equipment that...

Question 16

Beckman Enterprises purchased a depreciable asset on October 1, Year 1 at a cost of $100,000. The asset is expected to have a salvage value of $20,000 at the end of its five-year useful life. If the asset is depreciated on the double-declining-balance method, the asset's book value on December 31, Year 2 will be:

Accepted Answer

A) $36,000 
B) $42,000 
C) $54,000 
D) $16,000 
E) $90,000 
A) $36,000 
B) $42,000 
C) $54,000 
D) $16,000 
E) $90,000

Question 17

The modified accelerated cost recovery system (MACRS):

Accepted Answer

A) Is included in the U.S.federal income tax rules for depreciating assets. 
B) Is an outdated system that is no longer used by companies. 
C) Is required for financial reporting. 
D) Is identical to units-of-production depreciation. 
E) Does not allow partial year depreciation. 
A) Is included in the U.S.federal income tax rules for depreciating assets. 
B) Is an outdated system that is no longer used by companies. 
C) Is required for financial reporting. 
D) Is identical to units-of-production depreciation. 
E) Does not allow partial year depreciation.

Question 18

The specific meaning of goodwill in accounting is:

Accepted Answer

A) The amount by which a company's value exceeds the value of its individual assets and liabilities. 
B) Long term assets held as investment. 
C) The support of the board of directors for the operating decisions of management. 
D) The cost of developing, maintaining, or enhancing the value of a trademark. 
E) Rights granted an entity to deliver a product or service under specified conditions. 
A) The amount by which a company's value exceeds the value of its individual assets and liabilities. 
B) Long term assets held as investment. 
C) The support of the board of directors for the operating decisions of management. 
D) The cost of developing, maintaining, or enhancing the value of a trademark. 
E) Rights granted an entity to deliver a product or service under specified conditions.

Question 19

A company needed a new building. It found a suitable location with an existing old building on the land. The company reached an agreement to buy the land and the building for $960,000 cash. The old building was demolished to make way for the needed new building. Following is information regarding the demolition of the old building and construction of the new one:   Prepare a single journal entry to record the above costs assuming all transactions are paid in cash.

Accepted Answer

The answer of A company needed a new building. It...

Question 20

A leasehold refers to the rights the lessor grants to the lessee under the terms of a lease.

Accepted Answer

A) True 
 B)False

The relevant factors in computing depreciation do not include:

Depletion is:

Which of the following is an example of a betterment?

Which of the following is an example of an extraordinary repair?

The cost of an intangible asset is systematically allocated to depreciation expense over its estimated useful life.

Explain how to calculate total asset turnover. Describe what it reveals about a company's financial condition, whether a higher or lower ratio is desirable, and how it is best applied for comparative purposes.

Intangible assets do not include:

A company had average total assets of $887,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

_________________ refers to a plant asset that is no longer useful in producing goods or services with a competitive advantage because of new inventions and improvements.

Plant assets refer to intangible assets that are used in the operations of a business.

The modified accelerated cost recovery system (MACRS):

The specific meaning of goodwill in accounting is:

A leasehold refers to the rights the lessor grants to the lessee under the terms of a lease.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 8: Reporting and Analyzing Long-Term Assets

The relevant factors in computing depreciation do not include:

Depletion is:

Which of the following is an example of a betterment?

Which of the following is an example of an extraordinary repair?

The cost of an intangible asset is systematically allocated to depreciation expense over its estimated useful life.

Explain how to calculate total asset turnover. Describe what it reveals about a company's financial condition, whether a higher or lower ratio is desirable, and how it is best applied for comparative purposes.

Intangible assets do not include:

A company had average total assets of $887,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

_________________ refers to a plant asset that is no longer useful in producing goods or services with a competitive advantage because of new inventions and improvements.

Plant assets refer to intangible assets that are used in the operations of a business.

The modified accelerated cost recovery system (MACRS):

The specific meaning of goodwill in accounting is:

A leasehold refers to the rights the lessor grants to the lessee under the terms of a lease.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters